Some hazards will remain, but a well-managed dual transition to a green and digital economy has a lot of potential
The International Monetary Fund said Wednesday that while India’s economy recovers from the Covid-19 outbreak, it is critical for the country to focus on public investment, particularly in green sectors. “As we move toward recovery, it’s also necessary to focus on public investment, particularly green investment, so that recovery may be inclusive and green,” said Paolo Mauro, Deputy Director of the IMF’s Fiscal Affairs Department, during a press conference in Washington.
He stated that India’s debt ratio is about 90%, and that it is critical to provide a signal to investors that there is a medium-term fiscal framework in place that assures them that the debt ratio will drop in the medium run. In response to a query, Mauro stated that the situation with the epidemic is improving. He described the situation as “quite different” from a few months ago, adding that the number of cases is falling and vaccination is becoming more prevalent. “On the economic front, the priority remains to solve the health emergency, even though the situation is improving. It will continue to provide substantial assistance, especially to the poorer elements of the population, through social protection, job benefits, and other means,” Mauro added.
“In terms of more recent changes, I’d want to pay attention to the National Asset Reconstruction Company, or bad bank.” “This has a lot of potential since it’s critical to address non-performing loans,” he said. This has been a long-standing credit stumbling block, and this might be quite hopeful, he noted. “It’s critical that both the governance and independence of such so-called bad banks be in place so that public finances can be kept under control and inclusive growth can be promoted again,” Mauro said. With the FTP being extended yet again, schemes like RoDTEP must be fine-tuned, as exporters will rely heavily on it for the next six months until the government introduces new FTP plans.